Events:
According to the three-quarter report released by Fengxing shares on October 29, the company realized operating income of 315 million yuan from January to September, down 18.89 percent from the same period last year. The net profit attributed to shareholders of listed companies was 19.7737 million yuan, down 23.55 percent from the same period last year, and earnings per share was 0.27 yuan, down 30.77 percent from the same period last year.
Main points:
The prosperity of the downstream industry is low, and the declining trend of the company's performance accelerates. The company is the largest professional manufacturer of wear-resistant materials in the country, with a market share of about 6%. Downstream customers are mainly cement, mining and other cyclical industries. Affected by the macro-economy, the production capacity of downstream customers declined significantly, especially on the company's performance in the third quarter. Revenue fell 18.89% from January to September compared with the same period last year, and 33.19% in the third quarter. Although the prices of scrap steel, pig iron and soldering iron, the main raw materials upstream of the company, have dropped sharply, the prices of the company's products have also dropped accordingly due to the depressed economic conditions downstream. From January to September, the gross profit margin of the company's products decreased by 1.45 percentage points compared with the same period last year. In the third quarter, it decreased by 1.97 percentage points compared with the same period last year, while the company's management expenses rose 2.61% in the first three quarters and 7.21% in the third quarter. As a result, operating profit fell by 49.25% compared with the same period last year. From January to September, the company's non-operating income increased by 107.6% compared with the same period last year, resulting in a year-on-year drop in net profit of 23.55%, while deducting non-net profit decreased by 49.68% year-on-year. The decline in net profit in the third quarter was even more significant. The company's net profit in a single quarter dropped by 82.7%. The net profit of deduction fell by 209.65%. The slump in downstream sales also led to a sharp drop in net cash flow from the company's operating activities in the first three quarters by 1069.63%, and the decline in the company's performance accelerated.
Downriver transition pain conduction is inevitable in the short term, and the market prospect of middle and high-end wear-resistant castings is clear in recent years, macroeconomic downside superimposed transformation and upgrading pressure and energy conservation and emission reduction policy pressure, the company's downstream customer production capacity and performance shrank significantly, downstream transformation pain transmission affects the company's performance in the short term is inevitable. In the medium and long term, the transformation and upgrading of downstream enterprises and the national energy saving and emission reduction drive will promote the popularization of high-performance wear-resistant materials, the market concentration of the wear-resistant casting industry is also expected to be improved, and the market prospect of middle and high-end wear-resistant castings is clear.
The market leader of middle and high-end wear-resistant castings is the largest wear-resistant ball manufacturer in the domestic industry, with a production capacity of about 85000 tons, and the company's production capacity can reach 100000 tons when fully utilized. The company's IPO investment project has an annual production capacity of 50,000 tons of grinding media (balls, segments). The construction period of the project is 1.5 years, and the production capacity of the project will be increased to 135000 tons. The company is in an industrial leading position in scale, technology, technology and so on. As the market demand for wear-resistant ball segments changes to high-performance, high-quality high-chromium ball segments, the company has a bright future as a market leader in high-end wear-resistant castings.
Plan to cooperate with renewable resources companies to reduce costs and improve performance
The pain of transformation in the downstream industry will inevitably affect the short-term performance of the company. In the face of the continuing downturn in the downstream industry, the company takes the initiative to reduce the cost of upstream raw materials and improve performance. On October 29, the company and Ningguo win-win Renewable Resources Co., Ltd. signed a project cooperation intention agreement to cooperate to set up a scrap steel processing and distribution center, mainly engaged in renewable resources recovery, processing and marketing, with an annual processing capacity of 200000 tons of scrap steel.
Profit forecast and valuation
The current macroeconomic trend is still unclear, the recovery cycle of the company's downstream customers is still difficult to determine, and the decline in corporate performance in 2015 is difficult to reverse. In 2016, we expect the overall macro-economy to make steady progress, and the company's fund-raising projects will begin to contribute production capacity, and it is expected that the company's 16-year revenue, gross margin and other core assumptions will be improved. We estimate that the EPS of the company from 2015 to 2017 is 0.35,0.55,0.60 respectively, and the corresponding PE is 115,73,67 times respectively.